The government announced strong measures to tighten real estate loan regulations, leading many experts to express concerns that rental prices, including jeonse and wolse prices, will soar. This is because buying demand may be blocked by lending restrictions and could shift to the rental market.
Additionally, with the implementation of policies such as mandatory residence and preventing gap investments, it has been explained that the supply of jeonse properties may not meet demand, leading to an imbalance.
Gangnam's three districts (Gangnam, Seocho, and Songpa) and Yongsan District have been reassigned as land transaction permit zones, raising forecasts that jeonse prices, which have already experienced a surge, will increase further due to the loan regulation policies announced by the government on the 27th. According to the Korea Real Estate Board (REB), jeonse prices in Seoul have risen for 19 consecutive months from June 2023 to December of the previous year. Although there was a temporary stabilization in January of this year, prices turned upward again and have continued to rise until last month.
Yang Ji-young, a specialist at Shinhan Premier Pathfinder, noted, "The regulatory policy announced on the 27th of last month requires residency to obtain loans, and mandates that individuals must sell their existing dwellings and report the transfer, which will reduce the volume of rental properties." They added, "Next year will mark the 6th year since the implementation of the two rental laws, and there is a high possibility that landlords will raise the jeonse prices they have not been able to increase for so long all at once."
Yoon Ji-hae, the chief researcher at Real Estate R114, stated, "As buying demand shifts to rental demand due to loan regulations, there may be a temporary excess demand phase in the rental market, leading to a larger increase in jeonse prices."
The impact of large-scale villa jeonse fraud has also been cited as a reason for the decrease in apartment jeonse properties. According to the real estate big data platform Asil, the number of apartment jeonse properties in Seoul was recorded at 24,389 as of this date, marking an 11.2% decrease compared to the same period last year (27,461).
Ko Jun-seok, a professor at the Aung San Management Institute of Yonsei University, indicated, "If the requirements for jeonse deposit insurance are expanded, there is a possibility that current apartment jeonse demand may partially shift to villa jeonse demand," adding, "However, expanding the requirements is not easy, and with recent spikes in villa jeonse prices, there are movements among consumers who prefer to live in apartments. Therefore, it seems that the rise in apartment jeonse prices will continue in the second half of the year."
There is also a possibility that the gap in the rental market between the metropolitan area and local areas may widen in the second half of this year. Kim Hak-ryeol, the director of Smart Tube Real Estate Research Institute, stated, "Restricting jeonse fund loans may temporarily halt the rise in jeonse prices, but since high-priced jeonse had already been limited to 500 million won before the regulations were implemented, the effects may be more pronounced in lower-priced jeonse in local areas and the metropolitan area."